CAPEX

Client’s Challenge

An independent coal technology company was looking to secure financing to establish and marketing its unpatented coal fines binder technology in an African country. The company’s technology was intended to be used in industrial-sized coal briquetting plants and entailed a standardized system for briquetting fines sourced from arisings or slurry ponds. As the feasibility of the project remained unknown and no insights were available for market potential, potential investors remained hesitant to provide funding due to the technology being relatively unproven and formally untested.

Our solution

Our client engaged us to serve as the lead consultant to offer a multi-pronged solution. From market analysis, support with implementing a project execution plan, operational support with development of the first formal pilot plan and securing financing for the first scaled industrial plant, Contax Partners was engaged to offer an end-to-end solution.

At the start of engagement, we immediately leveraged our in-house knowledge and empowered our client with analysis and outlook on the regional coal industry. This included a comprehensive market sizing of the African mining industry, highlighting world-wide demand potential for coal fines binding, shortlisting possible clients, illustrating key geographic areas and pinpointing overall potential. Based on the results of this, our project team conducted a preliminary feasibility study to evaluate the applicability of the technology. Our joint operations team then undertook formal testing to study the potency of the binder under strict conditions.

Upon having positive initial results, a formal holding company structure was incorporated on behalf of the client and a design & utility patent was filed to secure the financial interests of all parties. Next, Contax Partners conducted a financial modelling and risk assessment exercise, accounting for (1) single investor model, (2) shared ‘tolling’ model with established mining partner and (3) entering into a joint venture with an existing mining partner on a pure profit-sharing basis. We also accounted for various assumptions in the model, such as (1) estimating cost factors when scaling up to multiple plants and/or mines; (2) adjusting price factors for increased output and tolling prices when profit-sharing with investor (3) forecasting impact of staggered start-up of multiple plants on cash flows and resulting impact on IRR & NPV, (4) gauging terminal values over a 15 year period; (5) benchmarking discount rates for the country and all applicable VAT tax rates; (6) forecasting cash flows in lieu of bank loans and (7) benchmarking exit multiples and strategy.

Impact on client’s business

Following a preliminary round of equity funding, the client secured its target funding for the pilot plant and the first pilot plant successfully produced pellets and briquettes of bound coal fines. After two additional rigorous rounds of formal testing, the technology was considered a trial success, allowing for the client to move onto planning for a full-scale 10,000 ton industrial plant.

At the present time, the client is on the verge of securing growth financing and finalizing Black Economic Empowerment quotas for full scale operations. While large-scale mining operations presently remain a core focus, the ability to transplant the technology to smaller plants across all coal mines still remains limitless and potentially very lucrative.

LET US HELP YOU SUCCEED IN THE ENERGY MARKET!

Contax Partners assists project owners, contractors and suppliers to maximize opportunities associated with these projects, guide them on the underlying risks related to execution and the effects of increasing project workload.

Paul Raw – Owner

Critical Risk Associates

Contax Partners business advisory consulting services have consistently identified new and developing opportunities for our core businesses across the region. As a result of advisory services we have been able to position ourselves strategically for future opportunities and in turn maximize our own development potential. Their market analysis and intelligence is consistently current in relation to what the market is doing and always reflects our specified goals. Contax Partners have conducted new market opportunity analysis on our behalf, identified key opportunities and then assisted us in the development of comprehensive solutions for those target opportunities.

Tony Mitchell - General Manager

Aman Water and Air Manager Technologies Middle East

As General Manager of Aman Water and Air Manager Technologies Middle East (divisions of Bahrain Energy Services) I have been working closely with Contax Partners since 2011 and have found them to be discrete, trustworthy, efficient and entirely professional in all dealings. Contax Partners have an excellent broad sector and market knowledge and an enormous network of industry contacts, particularly at senior levels, in sectors such as Oil & Gas (the wider energy sector), Petrochemical, Water & Electricity, Construction, and Healthcare, which are the focus sectors for our Clo2ix and Air Manager products and services.

JEREMY NOTHINGHAM – PARTNER

COALTECH

I have had the privilege to be associated with, and to work alongside the Contax Partners team for the past 4 years, and have always enjoyed doing business with the various members of their multi-talented team. Whether undertaking a study, developing ideas for a new investment, or developing a plan for the investment, or implementing that plan, the team works together seamlessly to make things happen in the best interests of their clients, they come highly recommended.

PAUL SCHOENFELD - MANAGER OF MARKET INTELLIGENCE & SPECIAL PROJECTS

SHELL EXPLORATION & PRODUCTION CO.

We used Contax Partners as a way to gain access to experts in a specific market where they have individuals with ‘boots on the ground’. I found Contax Partners to be particularly accommodating to the timeline required, and was impressed with their clear expectation setting from the onset. Furthermore, I found the support and interface to be top notch. We would absolutely recommend Contax Partners for consulting support where a company does not have the required knowledge. This is the space in which there is clear value add from procuring Contax Partners’ services.

Shukri A. Aziz Al-Mahrous – Deputy CEO

KNPC

Contax Partners is a highly professional organisation, which supported KNPC to implement its mega project strategy, and helped our company to make good decisions, particularly in relation to the Clean Fuels Project. Contax has excellent insights about the regional projects market landscape and Contractor landscape, and has definitely added value to us over the years.